Big Win for Copycat Products

This case is going to end up being a big one for our online marketplace. Many many producers are finding knock-off versions of their products sold via Amazon — often with Amazon’s direct backing. The decision here support’s Amazon’s approach and is especially important coming from the pro-protection Federal Circuit. Importantly, the court here does not allow IP rights to be improperly extended in order to catch a counterfeit.

Lanard makes the “Lanard Chalk Pencil” and sued the knock-off competitor Ja-Ru Products along with Lanard’s former distributor Dolgencorp and former retailer Toys-R-Us.

The setup begins with the clear statement that Ja-Ru copied the design and then Dolgencorp and TRU stopped buying from Lanard and started buying from Ja-Ru. The question then is whether this setup is simply fair competition or is it somehow unfair or unlawful.

Here, Lanard made its chalk-pencil product look like a well-known unprotectable product — a pencil with an eraser. Perhaps it shouldn’t be surprised that its associated exclusive rights are quite thin.

The trial court ended the case on summary judgment holding that (1) Ja-Ru’s product does not infringe the asserted design patent, D671,167; (2) that the asserted copyright over the pencil is invalid and not infringed; (3) Ja-Ur’s product does not infringe Lanard’s trade dress; and (4) there was no unfair competition since no IP rights were violated.

On appeal, the Federal Circuit has affirmed.

Infringing the Design Patent: The design patent is directed toward the “ornamental design for a chalk holder” as shown in the drawings. 35 USC 289 calls out design patent infringer as someone who as “applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale …” Here, the court did not cite the statute, but went straight to the test in Egyptian Goddess that asks – what is the scope of the patented design? In that case, the court explained that the scope of a design patent will depend upon how it differs from the prior art. Here:

The district court [] recognized that “the overall appearance of Lanard’s design is distinct from this prior art only in the precise proportions of its various elements in relation to each other, the size and ornamentation of the ferrule, and the particular size and shape of the conical tapered end.” In so doing, the district court fleshed out and rejected Lanard’s attempt to distinguish its patent from the prior art by importing the “the chalk holder function of its design” into the construction of the claim.

The Federal Circuit affirmed this approach as well as the district court’s separate consideration of functional and non-functional features of the design.

We have instructed trial courts that design patents “typically are claimed as shown in drawings,” but that it can be helpful to “distinguish[] between those features of the claimed design that are ornamental and those that are purely functional.” Egyptian Goddess.

In the end, the court compared the accused product with the patented design — keeping in mind the broad scope of prior art — and concluded that the ordinary observer would be drawn more to the differences than the similarities.

In its decision, the Federal Circuit focused some attention on the “points of novelty” that the Federal Circuit previously rejected as a requisite test for design patent infringement. Here, the court recognized that the doctrine remains a useful approach when considering the scope of design patent claims.

Here, as a matter of claim construction, the district court undoubtedly considered the points of novelty of the patented design over the prior art. And the court placed those points of novelty in context by considering that those points of novelty would draw “the attention of the ordinary observer.” [W]e conclude that the district court correctly balanced the need to consider the points of novelty while remaining focused on how an ordinary observer would view the overall design. See Egyptian Goddess.

Slip Op.

On Copyright infringement, the court here essentially ruled that the pencil is more like a shovel than a cheerleader uniform. See Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017).

In attempting to identify separable features, “the feature cannot itself be a useful article.” Star Athletica. … Here, Lanard’s ’458 copyright is for the chalk holder itself, and Lanard’s arguments in the district court and in this appeal merely confirm that it seeks protection for the dimensions and shape of the useful article itself. Because the chalk holder itself is not copyright protectable, Lanard cannot demonstrate that it holds a valid copyright.

Slip Op.

The appellate panel went on to similarly reject Landards trade dress & unfair competition claims. (“Lanard has not identified evidence with which it could satisfy its burden to prove at trial that, when customers see the Lanard Chalk Pencil, their minds jump to the producer of the product rather than the product itself.”)

Applying the typical (utility-driven PATENT) sense of obviousness, does the item being held matter?

Is this really a “____”-item holding arts question, or a larger genus material-holding arts question, with material including within its ambit any and all material that could be so held? Pencil-looking holders certainly have been used for many things besides graphite, so why would (or even should) the notion that what is being held is chalk matter in the legal sense?

The Means may indeed be faulty here. I would have held to precedent (instead of adding yet another patent contradiction) and given weight to the full claim – including title – per Curver, and STILL could come up with the determination of obvious.

I agree that MORE damage was done in this case (vis a vis the discredited Richardson v. Stanley Works logic) and what’s worse, this damage is needlessly inflicted.

Dennis: thanks for the detailed summary. I agree that based on recent decisions it is hard to see how the FC can be conceptualized as a strong supporter of design IP rights. They have essentially dismantled every thread except Gorham…which is probably next.

The only one of the several issues here in Lanard Toys Limited v. Dolgencorp LLC and Ja-Ru (Fed. Cir. 2020) for which the Fed. Cir. has exclusive appellate jurisdiction is the design patent infringement issue. Hence the particular significance of this needed Fed. Cir. decision on permissible design patent claim scope definition or breadth – taking into consideration close prior art and functional features versus novel features – rather than just leaving that undefined for an undefined claim jury infringement determination.

Thanks for the cite to your article Perry. But unobviousness distinctions argued, like size or proportion differences, or a label-only USE-limitation to chalk rather than lead, would not fly very far in any normal patent suit on any normal [utility] patent.

This defendant won. But one of these days, if I live long enough, I hope to see a cert petition from a losing design patent suit defendant with the following “Question Presented.”
May the Federal Circuit continue to ignore this Court’s controlling decision on unpatentability for obviousness in KSR under 35 U.S.C. 103 and to require the District Courts to use a different, older and lower test for design patents?

Since the courts have routinely said that their decisions do not re-write the statutory law (and this comment includes KSR), I think that any such cert petition would need to show just why any “different older and lower test” somehow does not meet the “non-rewritten” understanding of law under KSR.

There well may be a predisposition in the Court that since KSR did not rewrite the law, that ALL of those “different, older and lower test” cases simply were not affected.

Given that KSR was not geared to, or argued ANY type of impact to the then existing case law interpretations on design patent law, it may well be NOT possible to have a cert petition that could authoritatively present the issue properly to the Court.

Lacking any such proper presentation, do you really think that the Court wants to wade into the mash-up of design patent law, least of all on the obviousness front?

The design patent owners MRC argued exactly that in their cert petition (both of their patents were found invalid under 103 by the CAFC). Cert was denied, of course, since it makes no sense to try and shoehorn design patent obviousness into KSR. A more thorough analysis can be found in Hunter’s brief opposing cert (which bears my name).

Yes, anon, we agree. I just noticed that we used the same word! You and I must have had prior exposure to the shoe business ;) For me, it was Avia v. L.A. Gear (Fed. Cir. 1988), the case that changed my career.